9911796707
TMI Blog2018 (2) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... us locations all over India. As a part of its business activities, the appellant has been providing and continues to provide services such as Mandap Keeper services, Health Club Spa services, Beauty Parlour services, Rent-a-Cab services, Franchisee services, Management, Maintenance or Repair services, Business Auxiliary services, Dry Cleaning and Internet service. 3. The substantial question of law for consideration in the appeal is whether the Appellate Tribunal fell into error in holding that invocation of the extended period under proviso to Section 73(1) of the Act in respect of two services, i.e. management, maintenance and repair services and mandap keeper services is justified in the facts and circumstances of the case. 4. The facts of the case are that on 11.03.2005, an enquiry was initiated by the Service Tax Department/Commissioner, Service Tax, Delhi regarding non-payment of service tax by the appellant on the Franchisee Services under reverse charge mechanism. This service was being received by the appellant from M/s. Inter-Continental Hotel Corporation, USA, for which it paid a franchisee fee. The enquiry was subsequently transferred to the Directorate General of Cen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his appeal, only Mandap Keeper Services and Management, maintenance and repair services are relevant. The relevant paragraphs of the SCN as are excerpted below: " I. Mandan Keeper's Service: (Para 12.3 of SCN) The practice followed by the appellant for calculation of Service Tax was examined on the basis of some invoices issued by the appellant during the relevant period and it was found that: i. In case of bill for food the service tax is at rate giving 40%abatement to the existing applicable rate. For example, instead of giving 40% on * the gross value and charging service tax on it at applicable rate, they were taking the gross value and charging service tax @ 60% of the applicable rate. This does not appear to be correct. ii. Separate Bills for sale of beverages & liquor in the banquet functions were shown and no service tax was paid on that. iii. The functions wherever the audio & video equipment were provided from outside another bill was raised and no service tax was being levied on that. iv. The hotel also levies service charge @ 10% of the bill value which is in the nature of tip and is distributed amongst the staff and is added in the food bill itself. No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mber, 2011 passed by the Commissioner, Central Excise (adjudication), New Delhi, and refund and/or adjustment of service tax paid by the appellant from the respondent. Appellant's Contention: 9. The appellant submitted that during the period 2004-05 and 2005-06, it relied on Notification No. 12/2003 dated 20.06.2003 issued by the Central Government and judicial pronouncements of the Supreme Court, raised bills for Mandap Keeper Services in the manner described below and did not pay any service tax on the charges for food, beverages, liquor and mineral water. The manner in which the bills were raised was firstly, lump sum composite bill for hall rentals inclusive of food charges; secondly, lump sum composite bill for food charges inclusive of hall rentals and lastly, hall charges and charges for food and beverages, liquor, mineral water separately charged in the invoices. 10. The appellant urges that it was acting under a bona fide belief that the sale of the abovementioned items would attract VAT and not service tax. The appellant further submitted that the appellant had, during the enquiry itself, paid service tax on the sale of the abovementioned items for the period 2004-05 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax liability under the taxable category of "Management, Maintenance and Repair Services" for the Financial Year 2005-06. However, it got its registration certificate amended and started discharging its service tax liability from the financial year 2006-07 after the payment of service tax under Section 65(105)(zzg) came to its knowledge. The appellant also paid the service tax for the financial year 2005-06, being Rs. 48,41,187/-. The appellant, therefore, submits that in view of the said payment, no SCN should have been issued. It appellant contended that the department, however, due to calculation error claimed that Rs. 49,37,872/- was payable towards service tax and even if the Department's calculation were to be taken as correct, SCN of Rs. 96,685/-, being the difference could have been issued but the Department had instead issued a show cause notice alleging non-payment of the entire amount of Rs. 49,37,872/-. 14. In this regard, the appellant referred to the case of Commissioner of Central Excise v. Chemphar Drugs & Limiments [1989 (40) ELT 276 (SC)] wherein the Supreme Court held that: "In order to make a demand under Section 11A of the Central Excises and Salt Act f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , therefore, submits that in the present case, the duty of the Department does not get simply discharged by making a statement that the Appellant has wilfully suppressed material facts. 17. It was argued that the Adjudicating Commissioner and the Appellate Tribunal failed to appreciate that there was a reasonable cause for its actions/inactions complained of by the department and thus in view of Section 80 of the Finance Act no penalty could be imposed on the appellant. The appellant highlighted that no specific action or omission was evident in the allegations in the SCN with respect to Mandap Keeper Service and Management, Maintenance and Repair Services. The relevant parts of the SCN is excerpted below: "INVOCATION OF EXTENDED PERIOD 16. Invocation of extended period under Section 73 of Finance Act,1994 for demand of Service tax short paid. Review of the documents revealed that M/s. BHL has wilfully suppressed the material facts with an intent to evade payment of service tax. a) Mandap Keeper Service: A review of the Service Tax returns (RUD 12) filed by M/s. BHL for the period 2004-05 ar1d 2005-06 showed that they have not paid service tax on the total value of the servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rance of legal provisions or bona fide belief in this regard. The very fact that the appellant paid up the amounts during investigations and inquiry, revealed that it acknowledged its liability. 19. Counsel for the revenue argued that the plea of bona fides cannot be urged by the appellant, because it nowhere showed by its conduct that it was in fact ignorant of the tax liability cast on it. Urging the Court to reject the plea regarding validity of the extended period for imposition of penalty, the counsel submitted that the Court should be cognizant of the fact that the appellant is a large corporate house, with an army of advisers and consultants and its plea of ignorance of its tax liability cannot be accepted at face value; rather the onus to show that it did not act mala fidely was upon it, rather than otherwise. 20. The only question of law that arises in the present appeal is whether the Central Excise and Sales Tax Appellate Tribunal (CESTA) fell into error in holding that the eviction of the extended period under proviso to Section 73(1) of the Finance Act in respect of two services, i.e. management, maintenance and repair services and Mandap Keeper services is justified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of the proviso to Section 28 of the Customs Act for extension of limitation period for issuing notice for payment of duties that have not been levied, short-levied or erroneously refunded. The relevant paragraphs of the judgment are excerpted below: "9. The show cause notice was issued on 02.08.2001, more than six months after the Appellant had imported furnace oil on behalf of Uniworth Ltd. in January, 2001. This time period of more than six months is significant due to the proviso to Section 28 of the Act. The Section, at the relevant time, read as follows: 28. Notice for payment of duties, interest, etc. (1) When any duty has not been levied or has been short-levied or erroneously refunded, or when any interest payable has not been paid, part paid or erroneously refunded, the proper officer may,- (a) in the case of any import made by any individual for his personal use or by Government or by any educational, research or charitable institution or hospital, within one year; (b) in any other case, within six months, from the relevant date, serve notice on the person chargeable with the duty or interest which has not been levied or charged or which has been so short-levi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Co. v. Collector of Central Excise, Bombay [1995 Supp (3) SCC 462], while interpreting the proviso of an analogous provision in Section 11A of The Central Excise Act, 1944, which is parimateria to the proviso to Section 28 discussed above, made the following observations: XXXXXX XXXXXX XXXXXX 18. We are in complete agreement with the principle enunciated in the above decisions, in light of the proviso to Section 11A of the Central Excise Act, 1944. However, before extending it to the Act, we would like to point out the niceties that separate the analogous provisions of the two, an issue which received the indulgence of this Court in Associated Cement Co. Ltd. v. Commissioner of Customs [(2001) 4 SCC 59]3, at page 619 in the following words: 53. ... Our attention was drawn to the cases of CCE v. Chemphar Drugs and Liniments [(1989) 2 SCC 12]7, Cosmic Dye Chemical v. CCE [(1995) 6 SCC 117], Padmini Products v. CCE [(1989) 4 SCC 275], T.N. Housing Board v. CCE [1995 Supp (1) SCC 50] and CCE v. H.M. M. Ltd. (supra). In all these cases the Court was concerned with the applicability of the proviso to Section 11-A of the Central Excise Act which, like in the case of the Customs Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hort- levied by reason of collusion or any wilful misstatement or suppression of facts by the importer or the exporter, his agent or employee. Even if both the expressions "misstatement" and "suppression of facts" are to be qualified by the word "wilful", as was done in the Cosmic Dye Chemical case while construing the proviso to Section 11-A, the making of such a wilful misstatement or suppression of facts would attract the provisions of Section 28 of the Customs Act. In each of these appeals it will have to be seen as a fact whether there has been a non-levy or short-levy and whether that has been by reason of collusion or any wilful misstatement or suppression of facts by the importer or his agent or employee. (Emphasis supplied)" 23. It is important to note the proviso to Section 11A of the Excise Act at this stage. It states that: "Where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, by the reason of- (a) fraud; or (b) collusion; or (c) any wilful misstatement; or (d) suppression of facts; or (e) contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o difference in language of the proviso to Section 11A of the Excise Act and Section 73(1) of the Finance Act. Since, the pith and substance of both these provisions is the same, the various judgments of the Supreme Court discussing the interpretation of proviso to Section 11A of the Excise Act can be extended to interpret Section 73(1) of the Finance Act. Further, since proviso to Section 28 of the Customs Act is parimateria to proviso to Section 11A of the Excise Act (as held in Uniworth), the interpretation of proviso to Section 28 may also be extended to interpret the proviso to Section 73 of the Finance Act. Uniworth (supra) is also authority on the meaning of „wilful misstatement' and „suppression of facts'; the Court held that: "... 12. ... The conclusion that mere non-payment of duties is equivalent to collusion or wilful misstatement or suppression of facts is, in our opinion, untenable. If that were to be true, we fail to understand which form of non-payment would amount to ordinary default? Construing mere non-payment as any of the three categories contemplated by the proviso would leave no situation for which, a limitation period of six months may apply. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... euticals Co. v. C.C.E. [1995 (78) ELT 401 (SC)], this Court has held that the extended period of five years under the proviso to Section 11A(1) is not applicable just for any omission on the part of the Assessee, unless it is a deliberate attempt to escape from payment of duty. Where facts are known to both the parties, the omission by one to do what he might have done and not that he must have done does not constitute suppression of fact." 26. Again, the Supreme Court in Continental Foundation Joint Venture Holding v. Commissioner of Central Excise, Chandigarh-I (2007) 10 SCC 337, held that: "10. The expression "suppression" has been used in the proviso to Section 11A of the Act accompanied by very strong words as „fraud' or „collusion' and, therefore, has to be construed strictly. Mere omission to give correct information is not suppression of facts unless it was deliberate to stop the payment of duty. Suppression means failure to disclose full information with the intent to evade payment of duty. When the facts are known to both the parties, omission by one party to do what he might have done would not render it suppression. When the Revenue invokes the extended p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... promptly got itself registered for the said service and started discharging its service tax liability with respect to the said service from financial year 2006-07, and also paid service tax for the financial year 2005-06.The same has again been also acknowledged by the DGCEI in the SCN.The absence of any material disclosing intent to evade payment of service tax by the appellant is evident by the fact that it promptly made all the payments pertaining to service tax liability with respect to Mandap Keeper Service and Management, Maintenance and Repair Service as soon as the appellant became aware of the same (during the enquiry) and continued to pay service tax thereafter. The authorities are unanimous that to invoke the extended period under cognate provisions (such as Section 11A of the Excise Act or Section 28A of the Customs Act) the burden is cast upon it to prove suppression of fact. The Revenue has not been able to prove an intention on the part of the appellant to evade tax by suppression of material facts. In fact, it is clear that the appellant did not have any such intention and was acting under bona fide beliefs. For these reasons, it is held that the revenue cannot invo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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